Unemployment figures are on the rise, with a 16 year high and women being the hardest hit. This paints a bleak and jaw dropping look at the UK but could there be light at the end of the tunnel?

The figures released by the Office of National Statistics, show that unemployment has risen by 27,000 to 2.53 million in the three months to the end of January.
Interestingly, the figures released show that the number of British born workers with a job decreased by 208,000 last year, but this is the opposite of what is happening to foreign born workers with figures jumping by 212,000 last year.

The figures also revealed that two thirds of the 48,000 extra unemployed in the last quarter were women. This may be due to family commitments and rising childcare costs. Young workers have also been hit hard, with over a million aged 16-24 now jobless and nearly 250,000 unemployed for more than a year. Perhaps this is due to a shortage of graduate jobs and apprenticeships schemes that are available.

On a more positive note, we have seen employment increase by 60,000 to 29 million, due to a rise of 90,000 in the number of part time employee’s to 6.6 million. On the face of it however, perhaps in reality this reflects an “anything is better than nothing” attitude. Whilst this is a commendable approach it shows that people are having to accept part time employment when they would perhaps prefer full time.

On the other hand, there are signs of growth, with the number of job vacancies seeing a rise to 476,000 in the three months to January. Following this, economists are suggesting the worsening employment outlook had eased, and perhaps the economy will return to modest growth in the first quarter and avoid recession.

Historically, the UK has seen peaks of unemployment with a high of 11.90% recorded in April 1984 and a record low of 3.40% in December 1973. The previous unemployment rate averaged at 7.22% from 1971 until 2010. The current rate of 8.4% does paint a bleak picture, however historically and with the suggestion of growth there could be a light at the end of the tunnel for everyone.

The insolvency industry has been under pressure for some time regarding pre-packs – the practice of agreeing in advance of administration the sale of a troubled company’s business or assets – often to a connected party.

One of the main objectives with pre-packs is to rescue businesses and equally importantly preserve jobs – both of paramount importance particularly in the current economic climate.

However, unsecured creditors often see what they perceive to be a sale of the assets taking place without creditor knowledge for a fraction of the original worth. They understandably feel that it would be much more transparent if the assets were offered to the creditors instead of what is often seen as an underhand sale “cheap” to the directors or previous owners thus leaving creditors with little or no dividend.

In reality, this often isn’t a practical option.  Some businesses have few tangible assets but have significant goodwill, which can simply evaporate if word gets out – the business collapses and takes the jobs with it. In other cases the assets are specialist or perishable and only have a limited appeal to purchasers. There are instances too where the cost of moving heavy plant exceeds its value.

In a previous existence I owned a cleaning business and was an unsecured creditor when a hotel which I cleaned went through a pre-pack. Whilst it did not bring my business down it was a severe body blow – the impact on cash flow and profit. However, what many creditors initially overlook is the loss of turnover moving forward. In my case I was more than happy to work for the new company (on a pro forma basis!) rather than lose the future business on top of the bad debt I had sustained. And there were 18 part time jobs at risk at that location.

Next year may see some changes in legislation. It is proposed that administrators be required to give creditors three days’ notice of the pre-pack. The risk is that notification of creditors will increase the likelihood of customers cancelling contracts, staff leaving and suppliers withholding their goods – effectively many businesses would vanish before a sale takes place. A change in legislation looks likely but a balance needs to be reached or we could end up throwing the baby out with the bathwater.

For free confidential advice, please do not hesitate to contact Wilson Field on 0800 458 3320

I love Christmas. The excitement, seeing friends and family, eating lovely food, listening to Christmas songs and of course, giving presents!

Operation Christmas Child is an annual project carried out by Samaritan’s Purse. Each year in the run up to Christmas, Samaritan’s Purse collects presents to send to children who wouldn’t ordinarily receive a gift.

The idea is simple: cover a shoe box in brightly coloured paper and fill it with small presents. The shoeboxes are then shipped to children all over the world to open on Christmas Day!

For the past few years I’ve made one shoebox for a girl and one shoebox for a boy. It’s a wonderful feeling to know that Father Christmas will have 2 extra presents to give!

This year, I decided to inspire my colleagues at Wilson Field to join in! For the past few weeks we have been buying, cutting, sticking, papering and creating. The result was a spectacular tower of shiny, sparkly, multi-coloured shoeboxes of all different shapes and sizes!

Thanks to the time and effort taken by everyone who joined in, we have managed to collect a fabulous 15 boxes and the lives of 15 children will be brighter this Christmas!

I’d like to say a huge thank you to everyone who took part!

Claire Taylor

Figures showing the number of administrations within various industries are more telling than those showing the overall number of corporate liquidations, says a leading Sheffield insolvency expert.

Latest statistics from the Government Insolvency Service show a 6.5 per cent increase in total company liquidations in England and Wales in 2011 compared to 2010.

However, industry specific figures showing the rate of companies going into administration vary dramatically.

A 38 per cent increase in administrations within the construction industry this year demonstrates how the building sector is still taking a hit. A 34 per cent decrease in administrations in the transport, storage and communication industry may seem positive news but the figures suggest a different story.

Administration figures usually closely mirror liquidation figures as one often leads to the other.  While the overall figures show that the total of corporate liquidations has increased by 6.5 per cent, the breakdown of administrations within the different industries vary much more dramatically and illustrate the effect the recession has had on various trades.

“When the figures from the most recent quarter of 2011 are compared with the same quarter in 2010, almost all industries have seen a rise in the number of companies going into administration. The manufacturing industry has seen an increase of 7 per cent, construction has shot up by 38 per cent, and administrations within the wholesale and retail trade are up 20 per cent, while hotel and restaurant administrations have increased by 26 per cent.

A figure that stands out is the 34 per cent decrease of companies going into administration in the transport, storage and communication industry. Many might assume that this is a sign of improving business within the industry but I’d view this figure with caution. I would say that it illustrates the extreme challenges this industry has faced over the last two or three years. It demonstrates that the haulage and transport companies were the first to be hit hard by the economic downturn and many companies fell early on, leaving fewer companies to go into administration as time progressed.”

A lack of consumer confidence is probably to blame for the continuing increase in corporate liquidations and the Government needs to focus on restoring that confidence.

The overall increase in corporate insolvencies and increase of administrations within the retail and hospitality industries is unsurprising. A focus needs to be placed on improving consumer confidence which in turn should lead to growth for businesses.

It is likely the retail and leisure industries will take another hit in the first quarter of 2012 as those industries face a dip once the festive season has passed.

The companies that survive will be the proactive thinkers and those who act in advance.

Putting off seeking professional advice is key to not falling at the first hurdle. Many people find taking that first step a challenging and difficult step, but it is crucial if you are to survive.

Despite challenging economic times for many businesses, Wilson Field has recently expanded its own portfolio to open an office in the West Midlands, complementing its existing bases in Sheffield, Manchester and Leeds.

Having built a reputation for professional and personal service as well as exceptional industry knowledge, we are confident that Wilson Field Ltd can continue to help businesses both locally and across the UK with their business recovery, insolvency and debt solution needs.

To speak to an expert from Wilson Field’s free advice line call 0800 458 3320 or visit our website at www.wilsonfield.co.uk.

The old adage ‘cash is king’ has never been so relevant.

The recent financial rally in Europe and a whisper of optimism over the state of the banks has certainly substantiated this phrase – but a simple case of semantics dictates that these three words tell a very different story, with Insolvency Service figures painting a bleaker picture for SMEs up and down the country.

Despite these figures, the importance of SMEs cannot be underestimated. They now account for 99.9 per cent of all enterprises.

They also accounted for more than half of employment (59.1 per cent) and almost half of turnover (48.6 per cent) in the UK private sector, at the start of 2010, according to statistics issued by the Department for Business Innovation and Skills. So it stands to reason that the growth which our economy desperately needs is reliant on the wellbeing of SMEs.

Each business which has to cease trading will have its own reasons, but whatever the underlying cause, the crunch comes when a business grinds to a halt because of a lack of cash.

Some will have been unfortunate and hit by unforeseen circumstances – the extended wintry weather last year is one such example. But many of these examples will, unfortunately, have been down to poor financial management, and in particular cash flow. In the past I have met many experienced business owners who actually didn’t know the difference between cash flow and profit.

I have seen directors pop champagne bottles when they had won a contract which they thought would cement the future of their business. In fact the same contract has caused the demise of the business simply because it didn’t have sufficient cash to see the contract through.

This attitude is understandable considering the past stability of the economy and availability of funds through banks. The bank manager would have been the first port of call when a business was in need of a financial boost. But, despite a few public floggings from the Government, accessing money through the banks is proving to be very difficult for many SMEs, with scores of bank managers finding their hands tied.

But as disheartening as this can be, there are still options.

The Asset Based Lending (ABL) sector is reporting booming business. Using invoice finance (factoring or invoice discounting) can certainly fund cash flow in many cases, particularly for expanding businesses. Raising cash against unencumbered plant and equipment may be an alternative way to plug the funding gap.

There will be occasions when the ABL sector cannot help. At that stage, it is an easy option to give up and ‘throw in the towel’ – but that has to be a last resort after the amount of effort involved in building up a business to start with.

Another option may be to try attracting private investors. But if a company’s balance sheet is weak or overburdened with historical debt they are likely to be reluctant to pump money into what they think may be a lost cause. It is often in these situations that it may be essential to restructure the business to make the deal attractive to investors.

Many entrepreneurs are looking at every option to buy time or help them to restructure. One major problem, however, is that many business owners have a limited knowledge of what is available and exactly how it could work for them.

For a business which is desperately short of cash flow, the worst thing to do is…nothing. Taking independent professional advice gives your company more options, gives a better chance of preserving jobs and a better chance of survival and potentially a better outcome for your suppliers, too.

Contact us for free confidential advice on 0800 458 3320 or visit our Wilson Field website.

Due to the continuing expansion of this busy insolvency practice a vacancy has arisen for the above position.

The position involves promoting the company, its services and making appointments for our consultants.

Ideally applicants should be confident, possess excellent communication skills and have a good telephone manner. Previous experience would be an advantage, however training is available for the right candidate.

Please apply in writing enclosing a CV to Julie Fantom, Wilson Field Ltd, The Manor House, 260 Ecclesall Road South, Sheffield S11 9PS or by email j.fantom@wilsonfield.co.uk. (0114 2356780).

For more information on Wilson Field please visit our website www.wilsonfield.co.uk

Corporate Insolvency League Tables

Tenon has released the Personal and Corporate Insolvencies League Table for January – August 2011 (shown below).

We are pleased to find out that Wilson Field is the only SME to appear in the Top 20 for both Corporate Insolvencies and Personal Insolvencies.

Through tough economic conditions, it is important to keep on top of the game and continue to meet customer expectations.  We endeavour to offer the best professional advice to businesses and individuals to help them through tough times.

If you are experiencing cash flow problems or would like any advice on how we can help, please do not hesitate Wilson Field.

January - August 2011 – Corporate Insolvencies

^{Please note, statistics are based on data published in the Gazettes to date. Due to the time taken to advertise appointments, counts may vary to those anticipated. Groupings are based on the date of the appointment of an IP. Where a different IP is listed as a joint liquidator on a case, it will be counted twice.}

January - August 2011 - Personal Insolvencies

Source:  RSM Tenon Corporate Recovery League Tables

Most company directors have heard the phrase ‘trading whilst insolvent’ or ‘wrongful trading’, but what does it actually mean?

A Liquidator can take an action for wrongful trading under Section 214 of The Insolvency Act 1986 against a director, if it can be shown that he;

“knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation.”

This also applies to shadow directors, more of which can be read about in our earlier blog entry here. A successful wrongful trading action taken by a Liquidator can result in a director being made personally liable for the company’s debts which occurred after he ought to have realised that the company was insolvent.

So, how would a director know his company is insolvent? The definition of insolvency, as stated in Section 123 of The Insolvency Act 1986 can be summarised as;

a)     The inability of the company to pay its debts as they fall due

b)    The value of the company’s assets being less than the amount of its liabilities.

All this law is very well and good, but practically, what can a director look out for to indicate that his company may be insolvent? Some common indications of insolvency are listed below;

1)     The company is failing to pay its creditors on time, resulting in County Court Judgements building up.

2)     Payments to HM Revenue & Customs in respect of VAT or PAYE are not made on time and arrears are starting to build up.

3)     Filing at Companies House is not up to date as accounting duties fall by the wayside whilst the company deals with pressing cash flow issues and creditor pressure.

4)     The bank starts returning the company’s cheques as unpaid due to constraints on the company’s cash flow and the overdraft limit is regularly exceeded.

It is a director’s responsibility to act in the best interests of the company and ensure that the creditors’ position is not worsened by a prolonged period of trade following the onset of insolvency. It is good practice for a director to regularly review the company’s financial position and ensure that they take specialist advice when needed.

If you are worried about your company’s position or have suffered some of the symptoms of insolvency as listed above, contact our specialist advice team at Wilson Field to discuss your options.

Ruth Kaiser

This year we have 21 participants for the Bupa Great Yorkshire Run 2011 held on 9th October 2011.  We will be raising money for Neurocare and would really appreciate your support.  We will all be wearing Neurocare’s purple t-shirts and welcome everyone to join in the fun. We hope to see you there!

Wilson Field have always advocated using the latest technology in all areas from marketing through to day-to-day management of cases and recoveries. This has been driven in part to “stay ahead of the game”, to be cost effective and with an eye on our carbon footprint. Many ideas have been implemented, including:
• Wilson Field were one of the first Insolvency Practices to issue a single notice with a web-link and personalised password to enable the recipient to download information. The issue of advanced notices of Creditors Meetings as well as directors’ reports following Creditors’ Meetings can be bulky, involving high postage costs and numerous pages of printing with obvious “green” implications.
• For quite some time, potential clients have been able to compete application forms on line for a number of insolvency services and enquiries.
• Wilson Field were one of the first Insolvency Practices to issuing legal documents via social media networks. In a recent case, an individual owed money and was proving to be very elusive, claiming to have emigrated whereas it was obvious from Facebook that she had not. Proceedings were issued through Facebook. (A similar case recently occurred in Australia in a child support case, when the magistrate stated that the case was unusual but “demonstrative of social movements and the currency of the times”).
Innovation has been a key characteristic in the success and development of Wilson Field as a leading independent firm of Licensed Insolvency Practitioners. This extends beyond technology and into our core activities, constantly seeking creative ways to help businesses survive in difficult circumstances and supporting individuals who have run into financial problems.
If you are a business owner and are concerned about cash flow or any other financial issues, the worse thing is to delay taking advice – it reduces available options and the chances of survival.
Phone Freephone now on 0800 458 3320 and ask for Phil or visit our website at www.wilsonfield.co.uk